Ann wants to buy an office building which costs $1,000,000. She obtains a 30 year partially amortizing fixed rate mortgage at 100% LTV, an annual interest rate of 7%, with monthly compounding and monthly payments. The payment on the loan is $6,000 per month. Ann has a balloon payment due 5 years after she gets the loan. If Ann pays the required monthly payment for 5 years, how much is her balloon payment? OA. $1,000,000 OB. $941,315.90 OC. $988,067.85 OD. $864,988.05

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 25PROB
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QUESTION 12
Ann wants to buy an office building which costs $1,000,000. She obtains a 30
year partially amortizing fixed rate mortgage at 100% LTV, an annual interest
rate of 7%, with monthly compounding and monthly payments.
The payment on the loan is $6,000 per month. Ann has a balloon payment due
5 years after she gets the loan. If Ann pays the required monthly payment for 5
years, how much is her balloon payment?
OA. $1,000,000
B. $941,315.90
OC. $988,067.85
OD. $864,988.05
Transcribed Image Text:QUESTION 12 Ann wants to buy an office building which costs $1,000,000. She obtains a 30 year partially amortizing fixed rate mortgage at 100% LTV, an annual interest rate of 7%, with monthly compounding and monthly payments. The payment on the loan is $6,000 per month. Ann has a balloon payment due 5 years after she gets the loan. If Ann pays the required monthly payment for 5 years, how much is her balloon payment? OA. $1,000,000 B. $941,315.90 OC. $988,067.85 OD. $864,988.05
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